This Wednesday, June 12, is a crucial day for the price of bitcoin (BTC). Investors are attentive to the publication of the May inflation report in the United States, which has already been released, and what will be the strategy adopted by the Federal Reserve (FED) facing this indicator: will there be a cut in interest rates or not?
Prior to these announcements, the price of BTC was in the area of 66,000 and 67,000 dollars throughout this Tuesday, while the exchange-traded funds (ETFs) of this digital currency registered net outflows of more than 200 million dollars . Below, the price of bitcoin from its all-time high until today:
Bitcoin ETFs, as seen in the chart below, broke a 19-day streak of net inflows on Monday. This change in behavior suggests that investors were taking risk management measures in the face of potential adverse data for the market.
Regarding the Consumer Price Index (CPI) of the United States, it was announced that inflation was lower than the previous month and lower than expected.
According to a report published by the business news channel CNBC, the projections They indicated that inflation in May would be 0.1%, compared to April, which gave an increase of 3.4% in the last 12 months. But the results were opposite, and it was learned that this index had a slight drop.
The price of bitcoin reacted instantly when this economic data from the United States became known:
Additionally, during this afternoon, the Federal Open Market Committee (FOMC) will begin one of its usual meetings. As Criptonoticias already reported, this is a key event in the economic calendar, where decisions are made about the country’s monetary policy, particularly about interest rates.
These are the rates at which banks lend money to each other in the short term and influence other interest rates such as loans and savings for consumers and businesses.
This means that, if there are high rates, credit becomes more expensive, so companies and traders will be less likely to request loans and acquire assets with high volatility such as BTC. In this way, they will seek refuge in more traditional and less risky assets such as Treasury bonds.
In this framework, the financial services company CME Group forecasts a 99.4% probability that the Federal Reserve will maintain the current interest rate of 5.25% to 5.50%, instead of implementing a cut in the cups.
FOMC members are also expected to release quarterly updates to their Summary Economic Projections, which could be influenced by the CPI report. This is a dot plot that can give an indication of how many rate cuts there could be in the remainder of the year.
For its part, the Reuters news agency conducted a survey among several economists, who assure that the FED will make interest rate cuts in September and another before the end of 2024.
In this regard, Ed Prerks, CEO of the investment company Franklin Templeton Investors, referred to the FOMC meeting and noted: “We continue to think that a considerable normalization of rates is possible. So the Fed will stay put tomorrow.” He remarked:
«It will be a pretty boring meeting. I think it will be interesting to see the economic projections that come out and how they change, if at all, from the March projections, but really, as we get closer to 2025, we are still convinced that the FED will continue to see disinflation towards its objective and that this will allow this normalization to be more towards the neutral type.
Ed Prerks, CEO of Franklin Templeton Investors.
What happens to the price of bitcoin?
Throughout Tuesday, the BTC price fell by 3.5%, on average, and remained closer to the $66,000 area than the $67,000 area.
These movements were seen as something “positive” by the market analyst known on social networks as SantinoCripto, who detailed in his X account:
«All these weeks I have been telling you that that level is very strong support. If the bulls manage to hold it, it will be a great bullish sign. Tomorrow could be a great day, pay close attention to the words of (Jerome) Powell, president of the FED, at the FOMC meeting. “Throughout 2024, these meetings are having a bullish effect on the asset price.”
Santino Cripto, market analyst.
In that vein, for analyst Juan Rodríguez, these macroeconomic data will define whether BTC goes towards a new all-time high (ATH) in the short term. The price record is $73,700 and was recorded on March 14, 2024.
The truth is that these indicators will be key to knowing if, finally, BTC and cryptocurrency investors are witnessing a new “bull run.”
Update 6/12/2024: This text is updated to add the inflation data that was released.
